Wanzhou International announced that it intends to separate the US meat products subsidiary Smithfield and independently list the US stock market:

Wanzhou International announced that it plans to split up Smithfield Foods Co., Ltd. (hereinafter referred to as Smithfield) and list independently on the US Exchange. Smithfield was listed on the New York Stock Exchange between 1999 and 2013. In 2013, it was acquired by Wanzhou International at a cost of 4.9 billion US dollars, privatized from the NYSE and became a wholly-owned subsidiary of Wanzhou International. However, with the return to US stocks this time, the announcement indicates that Smithfield and the Group will enhance the flexibility of regional operations.

Smithfield US stock listing plan: According to the announcement, Smithfield is expected to sell up to 20% of its shares. After the offering, Wanzhou International's shares in Smithfield are expected to be reduced to about 80% at most. As a result, Smithfield will remain a subsidiary of Wanzhou International after the US stock listing, and Smithfield will continue to fully integrate with Wanzhou International. The final issue price has yet to be determined, and the valuation is currently expected to be no less than the net asset value reported on September 30 (i.e. $5.38 billion).

Shareholder quota: According to the announcement, Wanzhou International shareholders will be entitled to receive a physical dividend from Smithfield, which is equivalent to approximately 0.35% to 0.45% of Smithfield's total issued share capital expanded through sale.

Wanzhou International will distribute shares according to shareholders' shareholders' shareholders' shareholding ratio by means of physical distribution or cash substitution.

We look forward to the valuation potential brought about by the subsidiary Smithfield spin-off and the US stock listing:

Smithfield Group's revenue for 2022/2023 was $162/14.6 billion, and 2022/2023 net profit after tax was $7.24/ -0.07 billion, respectively. Since this year, the Group has turned a loss into a profit. Among them, the meat products business has stabilized, US pig prices have rebounded, and pig breeding costs have led to profit flexibility. As a result, the Smithfield Group's revenue/profit for the first nine months of 2024 was 10.19/0.61 billion US dollars, respectively, and the loss after tax for the same period was 0.01 billion US dollars. Comparable companies Tyson and Hormel have a dynamic price-earnings ratio of about 14 times, while Smithfield's minimum valuation ($5.38 billion) corresponds to a price-earnings ratio of about 8 times. Currently, Wanzhou International holds 70.3% of Shuanghui Development's shares. After Smithfield's listing, Wanzhou International held no less than 80% of its shares. Smithfield's US shares are listed independently, and Wanzhou International's overall valuation is expected to benefit.

Risk warning:

US pork prices fluctuate greatly;

Weak terminal sales of meat products;

Feed prices have risen sharply;

Food safety risks.